Use the Following Information to Answer Problems Below

Essay

Use the following information to answer Problems below
Walkeasy Co. produces shoes and memory foam insoles. The memory foam insoles were originally designed to be a component of the shoes (1 insole per shoe). However, the market for memory foam insoles was profitable enough that management has opted to sell some of the insoles on their own. Any insoles produced beyond what is necessary to meet the needs of shoes production are sold at market prices. Normally, the transfer cost of the insoles is equal to the market sale price. Because of a differentiation strategy, management at Walkeasy has decided that the Shoes department and the Insoles department should be measured and tracked separately. When insoles are transferred to the Shoes department, they are inventoried at market prices.
The following information relates to the costs of production for the year for the two departments. Per the company policy, all inventories are kept at stable levels: in other words, sales and production are equal, and purchases of raw materials equal those requisitioned for production.


-Which department has the higher ROI? Is it due to greater profitability per sales dollar, or to efficient use of assets in generating sales?